IT Outsourcing Firm Cognizant Jumps on Earnings

Cognizant Technology Solutions Corp. (NASDAQ: CTSH) reported second-quarter adjusted earnings per share (EPS) of $0.88 and $1.8 billion in revenue before markets opened today. EPS for the same period a year ago was $0.67, and last year’s revenue totaled $1.49 billion. The results compare to the Thomson Reuters consensus estimates for EPS of $0.80 and $1.79 billion in revenue.

The company’s president said:

Cognizant once again delivered industry leading growth despite a challenging macro-economic environment. This market downturn, as with those before, is serving as a catalyst for clients to embrace a broader range of our services. Clients view us as a strong partner to achieve operational improvements in efficiency and effectiveness while simultaneously innovating for the future.

Cognizant also revised its third-quarter and full-year guidance. For the third quarter the company reaffirmed its revenue forecast of $1.875 billion, slightly less than the consensus estimate of $1.88 billion, and raised its adjusted EPS forecast to $0.92, compared with a consensus estimate of $0.86. For the full 2012 fiscal year, revenue is forecast at $7.34 billion and adjusted EPS is forecast at $3.64, well above the consensus estimate of $3.37.

When competitor Infosys Ltd. (NASDAQ: INFY) reported earnings last month, the India-based company missed both EPS and revenue expectations and lowered guidance for its 2013 fiscal year. Infosys also noted that the weak global economy was affecting corporate spending on IT. Cognizant’s earnings and outlook are just the opposite.

Cognizant’s shares are up about 10% in premarket trading today, at $63.63. The current 52-week range is $53.54 to $78.00. Thomson Reuters had a consensus analyst price target of $71.65 before today’s results were announced.

Paul Ausick